What the ECSPR actually regulates and what it does not regulate

The European Crowdfunding Service Providers Regulation (ECSPR) created the first uniform legal framework for crowdfunding across Europe. The public often perceives this regulation as comprehensively covering the entire crowd investing process. In practice, however, its scope is clearly defined. In order to assess the market realistically, it is important to understand what the ECSPR specifically regulates and which areas are expressly not covered.

The ECSPR is primarily aimed at crowdfunding platforms as service providers. It defines the conditions under which platforms may broker financing and specifies organisational, procedural and information-related obligations. These include requirements for corporate organisation, the handling of conflicts of interest, the provision of standardised investor information and the design of the investment process. The aim is to create a reliable framework within which investors can make informed decisions.

However, the economic quality of individual projects or their prospects of success are not regulated. The ECSPR does not prescribe which projects may be offered, nor does it guarantee returns or protect against economic losses. The assessment of business models, real estate or financing structures is also not within the scope of the regulation. Responsibility for investment decisions remains expressly with investors.

Nor does the ECSPR replace other existing areas of law. Tax treatment, company law issues or insolvency law rankings are not regulated by the ECSPR, but remain subject to national law. Issues such as secondary markets, liquidity or exit options are also addressed only to a very limited extent and remain heavily dependent on the respective market structures in practice.

The limitation of the scope of regulation is not a shortcoming, but a conscious decision. The ECSPR is intended to create transparency and uniform minimum standards without interfering with entrepreneurial freedom or individual risk decisions. For investors and project initiators alike, this means that regulation provides clear rules of the game. However, it does not replace their own assessment of risks, structures and economic contexts.